The
Westwood
Funds
WESTWOOD EQUITY FUND
WESTWOOD INTERMEDIATE BOND FUND
WESTWOOD BALANCED FUND
Annual Report
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September 30, 1996
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<PAGE>
THE WESTWOOD FUNDS
==================
Westwood Balanced Fund o Westwood Equity Fund o Westwood Intermediate Bond Fund
Annual Report
September 30, 1996
Dear Fellow Shareholders:
We are pleased to provide the September 30, 1996, annual report for the
Westwood Funds, including the Westwood Equity Fund, Westwood Balanced Fund and
Westwood Intermediate Bond Fund.
Over the past year we have reached important milestones for the Westwood
Funds. While the funds continue to achieve strong performance, the Balanced and
Intermediate Bond funds have both achieved five-year performance records. The
Westwood Equity Fund will achieve a ten-year record as of the end of this
calendar year. For those of you who have been part of the Westwood Equity Fund
since its inception, we are continually grateful for your confidence over the
years. In addition to reaching these important milestones, both the Equity and
Balanced Funds maintain the highest ranking (*****) available from
Morningstar.(1)
Economic Commentary
The preceding twelve months have been both an exciting and nervous time
for portfolio managers. Although inflation appears to remain moderate and
economic data remains favorable for the market, we have increased our defensive
posture in the funds as the market continues to reach and surpass historic
highs. Although the funds' defensive profiles have increased with regard to
risk, we are continuing to identify securities that offer opportunities for
growth and capital appreciation. The following comments address each of the
Westwood Funds over the prior twelve month period.
Westwood Equity Fund
For the fiscal year ending September 30, 1996, the *****-rated Westwood
Equity Fund Retail Class posted a return of 26.9% and the Service Class returned
26.3%. This compares favorably to the average return of 16.0% for the 219
capital appreciation funds tracked by Lipper Analytical Services, Inc. and a
return of 20.3% for the unmanaged S&P 500 Index, over the same period.
- --------------------------------------------------------------------------------
(1) Past performance does not guarantee future results. Morningstar proprietary
ratings reflect historical risk-adjusted performance as of September 30, 1996.
The ratings are subject to change every month. Morningstar ratings are
calculated from the Funds' 3- and 5-year average annual returns in excess of
90-day T-bill returns with appropriate fee adjustments and a risk factor that
reflects fund performance below 90-day T-bill returns. 10% of the funds in an
investment category receive 5 stars. As of September 30, 1996, the Westwood
Equity Fund Retail Class received an overall rating of 5 stars (*****) from
Morningstar. The Fund was rated 5 stars for the 3- and 5-year periods ended
September 30, 1996 among 1,708 and 1,018 equity funds, respectively. As of
September 30, 1996, the Westwood Balanced Fund Retail Class received an overall
rating of 5 stars (*****) from Morningstar. The Fund was rated 5 stars for the
3- and 5-year periods ended September 30, 1996 among 3,059 and 1,758 balanced
funds, respectively. Both funds also received a 5-star rating for the one-year
period. The one year rating is calculated in the same method but is not a
component of the overall rating.
<PAGE>
For the quarter ended September 30, 1996, the Equity Fund Retail Class
posted a return of 3.4% and the Service Class posted a return of 3.2% versus
3.1% for the S&P 500 and 2.0% for the Lipper average. Year-to-date through
September 30, 1996 the Equity Fund Retail Class appreciated 17.3% and the
Service Class appreciated 16.9%. The S&P 500 gained 13.5% and the Lipper Average
gained 13.4% over the same period.
For the five years ended September 30, 1996, the Equity Fund Retail Class
had a total return of 118.1%, which equates to an average annual return of
16.9%. The Equity Fund Retail Class and Service Class achieved total returns
since their respective inceptions on January 2, 1987 and January 28, 1994,
through September 30, 1996, of 257.4% and 57.2%, which equate to average annual
returns of 14.0% and 18.4%, respectively.
During the past twelve months, we have increased the defensive structure
of the Equity Fund by selling positions in more volatile names such as Nautica
Enterprises and Tiffany and Company (both achieved their respective price
targets) from the consumer cyclical sector, and Johnson & Johnson from the
consumer staples sector. Proceeds were invested in lower beta and higher
yielding securities such as Mobil Corporation and SmithKline Beecham plc (ADR).
Additionally, our increased exposure to REITs (Real Estate Investment Trusts),
which outperformed all stock market indices during the most recent quarter,
contributed to the Fund's strong performance. REITs have become an increasingly
important component of the Fund, as they provide an opportunity to add yield
(which offers increased protection of principal). Westwood views REITs as
undervalued assets presenting opportunities for growth. Other top performing
securities over the twelve months included Computer Associates, Dell Computer,
Sterling Software and IBM from the technology sector, and Deere and Company from
the capital goods sector.
The Westwood Equity Fund was listed among top performing equity funds in
several publications including The Wall Street Journal, Money and Fortune.
Westwood Balanced Fund
For the fiscal year ending September 30, 1996, the *****-rated Westwood
Balanced Fund Retail Class posted a return of 19.0% and the Service Class
returned 18.8% versus an average return of 12.5% for the 291 balanced funds
tracked by Lipper Analytical Services, Inc. The blended return of 60% S&P 500
and 40% Lehman Brothers Government Corporate Bond Index for the same period was
14.0%.
For the quarter ended September 30, 1996, the Balanced Fund Retail and
Service Class each posted returns of 2.7%, equaling the 2.7% return for the
Lipper average. Year-to-date through September 30, 1996, the Balanced Fund
Retail Class returned 11.1% and the Service Class earned 11.0%, while the Lipper
average returned 7.9%.
For the three years ended September 30, 1996, the Balanced Fund Retail
Class had a total return of 52.9%, which equates to an average annual return of
15.2%. Over the same period, the Service Class had a total return of 51.4% which
equates to an average annual return of 14.8%. The Balanced Fund Retail Class and
Service Class achieved total returns since their respective inceptions on
October
2
<PAGE>
1, 1991 and April 6, 1993, through September 30, 1996, of 93.0% and 62.0%, which
equate to average annual returns of 14.0% and 16.1%, respectively.
As of September 30, 1996, the Balanced Fund had approximately 60% invested
in equities, 39% in fixed income with the balance invested in short-term
securities. Strategies for the equity and fixed income funds which are discussed
in this letter, also apply to their respective components in the Balanced Fund.
Over the past year, the Westwood Balanced Fund has achieved continued
recognition as a top performing balanced fund. The Balanced Fund was "Fund of
the Month" in the June issue of Money Magazine and was praised by the Dallas
Morning News as a fund which achieved a 31% return in 1995, while maintaining a
conservative balanced approach.
Westwood Intermediate Bond Fund
The fixed income market changed gears as 1995 rolled into 1996. Bond
market participants' hopes for a Fed easing and a balanced budget gave way to
concerns about Fed tightening, as a strong labor market propelled the economy to
stronger than anticipated growth. Bond market participants have been torn
between the perception of a strengthening economy with an increased concern of
inflation and that of a slow growth environment and corresponding reduced
inflation concerns. As a result, we witnessed a narrow trading range in the bond
market with yields on the 30-year Treasury bond - a barometer for expectations
of inflation - moving between 6.70% and 7.20% over the past five months.
For the fiscal year ending September 30, 1996, the Westwood Intermediate
Bond Fund Retail Class earned 4.5%, matching the return of the Lehman Brothers
Government Corporate Bond Index.
For the quarter ended September 30, 1996, the Intermediate Bond Fund
earned 2.8%. Year-to-date through September 30, 1996 the Fund was up 0.2%. For
the three year period, the Intermediate Bond Fund had a total return of 9.8%
which equates to an average annual return of 3.2%.
Since its inception on October 1, 1991 through September 30, 1996, the
Fund's total return was 35.4%, which equates to an average annual return of
6.2%. The Lehman Brothers Government Corporate Bond Index had an average annual
return of 7.7% over the same period.
During the previous twelve months, the Fund benefited from an
overweighting in higher yielding intermediate-term corporate bonds - one of the
best performing sectors in the fixed income universe - as well as from an
overweighting in asset-backed securities. The top performing securities were
Olympic Financial 13% due 5/1/00 and Jacor Communications 10.125% due 6/15/06.
Asset-backed securities collateralized by home equity and auto loans also
contributed to the Fund's performance.
3
<PAGE>
Capital Market Outlook:
We expect to see a continuation of the slow and steady growth with
moderate (2% to 3%) inflation we have been experiencing over the last four years
- - an environment that bodes well for corporate profits and supports continued
strength in the stock market. With inflation to remain in check, we expect the
fixed income markets to remain stable over the next twelve months.
Minimum Initial Investment -- $1,000
The Funds' minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent minimums. No initial minimum is
required for those establishing an Automatic Investment Plan.
We welcome your comments and encourage you to write us directly at our
offices or on the internet at [email protected].
Sincerely,
/s/ Susan M. Byrne
Susan M. Byrne
President and Chief Investment Officer
[email protected]
November 1, 1996
4
<PAGE>
THE WESTWOOD FUNDS
==================
WESTWOOD EQUITY FUND
WESTWOOD INTERMEDIATE BOND FUND
WESTWOOD BALANCED FUND
(unaudited)
Westwood Funds -- Retail Class Shares
-------------------------------------
Average Annual Returns -- September 30, 1996(a)
Calendar
--------
3Q 1 yr 5 yr Life of Fund Inception Date
-- ---- ---- ------------ --------------
Equity................. 3.4% 26.9% 16.9% 14.0% 1/02/87
Intermediate Bond...... 2.8 4.5 -- 6.2 10/01/91
Balanced............... 2.7 19.0 -- 14.0 10/01/91
Westwood Funds -- Service Class Shares
--------------------------------------
Average Annual Returns -- September 30, 1996(a)(b)
1 yr Life of Fund Inception Date
---- ------------ --------------
Equity......................... 21.3% 16.6% 1/28/94
Balanced....................... 14.1 14.6 4/06/93
(a) Average annual and total returns reflect changes in share price and
reinvestment of dividends and are net of expenses. The net asset value of
the Fund is reduced on the ex-dividend (payment) date by the amount of the
dividend paid. Of course, the returns represent past performance and do not
guarantee future results. Investment returns and the principal value of an
investment will fluctuate. When shares are redeemed they may be worth more
or less than their original cost.
(b) Adjusted for the maximum 4.0% sales charge.
5
<PAGE>
THE WESTWOOD FUNDS (Retail Class)
Index Comparisons
The investment performance of the Equity, Intermediate and Balanced Funds
are compared to the S&P 500 Index, Lehman Brothers Government/Corporate Bond
Index and 60% S&P 500 Index/40% Lehman Brothers Government Corporate Bond Index,
respec tively, from January 2, 1987 for the Equity Fund, October 1, 1991, for
the Inter medi ate Bond and Balanced Fund (Retail Class) and January 28, 1994
for the Service Class of the Equity Fund, January 31, 1994 for the Inter mediate
Bond Fund, and April 6, 1993 for the Balanced Fund (commencement of opera tions
for each of the Funds) through Septem ber 30, 1996. Effective October 6, 1994,
the Equity, Intermediate Bond and Balanced Fund's Retail Class became no-load.
The Retail Class graphs reflect the current no-load status. The graph assumes
all dividends and distributions from the Fund are reinvested at net asset value.
Equity Fund
A $10,000 investment in the Equity Fund Retail Class made on the inception
date would have grown to $35,740 (as of Septem ber 30, 1996). The graph shows
how this com pares to our benchmark over the same period. Total return for the
life of the Fund was 257.4%.
Intermediate Bond Fund
A $10,000 investment in the Intermediate Bond Fund Retail Class made on
the inception date would have grown to $13,540 (as of September 30, 1996). The
graph shows how this compares to our benchmark over the same period. Total
return for the life of the Fund was 35.4%.
Balanced Fund
A $10,000 investment in the Balanced Fund Retail Class made on the
inception date would have grown to $19,300 (as of Sep tem ber 30, 1996). The
graph shows how this compares to our benchmark over the same period. Total
return for the life of the Fund was 93.0%.
Past performance is not predictive of future performance.
[The following table was represented as a line graph in the printed material.]
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Label A B
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Label Westwood Equity Fund (Retail) Class S&P 500 Index
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1 1/87 10000 10000
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2 9/87 13165 13599
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3 9/88 11779 11893
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4 9/89 15322 15785
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5 9/90 13699 14305
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6 9/91 16396 18766
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7 9/92 17078 20841
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8 9/93 20508 23553
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9 9/94 22383 24421
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10 9/95 28169 31684
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11 9/96 35740 38116
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Average Annual Total Return
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One Year 5 Year Life of Fund
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26.9% 16.9% 14.0%
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[The following table was represented as a line graph in the printed material.]
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Label A B
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Label Westwood Intermediate Bond Fund (Retail Class) Lehman Bros.
Gov't Corp.
Bond Index
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1 10/91 10000 10000
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2 9/92 11186 11323
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3 9/93 12331 12620
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4 9/94 11658 12098
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5 9/95 12956 13834
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6 9/96 13540 14467
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Average Annual Total Return
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One Year Life of Fund
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4.5% 6.2%
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[The following table was represented as a line graph in the printed material.]
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Label A B
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Label Westwood Balanced Fund (Retail Class) 60% S&P 500/40%
Lehman Bros. Gov't
Corp. Bond Index
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1 10/91 10000 10000
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2 9/92 10797 11207
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3 9/93 12621 12603
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4 9/94 13291 12670
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5 9/95 16203 15658
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6 9/96 19300 17850
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Average Annual Total Return
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One Year Life of Fund
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19.0% 14.0%
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6
<PAGE>
THE WESTWOOD FUNDS (Service Class)
Equity Fund
A $10,000 investment in the Equity Fund Service Class with a maximum sales
load of 4.00% would have grown to $15,090 (as of September 30, 1996). The graph
shows how this compares to our benchmark over the same period. Total return for
the life of the Fund was 57.2%, without adjusting for the sales charge.
Balanced Fund
A $10,000 investment in the Balanced Fund Service Class with a maximum
sales load of 4.00% made on the inception date would have grown to $15,550 (as
of September 30, 1996). The graph shows how this compares to our bench mark over
the same period. Total return for the life of the Fund was 62.0%, without
adjusting for the sales charge.
Past performance is not predictive of future performance.
[The following table was represented as a line graph in the printed material.]
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Label A B
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Label Westwood Equity Fund (Service Class) S&P 500 Index
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1 1/94 9600 10000
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2 9/94 9514 9896
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3 9/95 11944 12839
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4 9/96 15090 15445
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Average Annual Total Return
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One Year Life of Fund
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21.3% 16.6%
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[The following table was represented as a line graph in the printed material.]
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Label A B
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Label Westwood Balanced Fund (Service Class) 60% S&P Index/40%
Lehman Bros. Gov't
Corp. Bond Index
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1 4/93 9600 10000
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2 9/93 9809 10443
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3 9/94 10751 10499
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4 9/95 13081 12975
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5 9/96 15550 14792
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Average Annual Total Return
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One Year Life of Fund
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14.1% 14.6%
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7
<PAGE>
Westwood Equity Fund
Portfolio of Investments -- September 30, 1996
================================================================================
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 90.8%
AIRLINES -- 1.2%
16,100 Southwest Airlines Co................. $ 442,945 $ 368,287
---------- ----------
AUTO RELATED -- 6.9%
28,500 Chrysler Corporation ................. 812,054 815,813
14,700 Eaton Corp............................ 801,769 887,512
11,800 Lear Corp.*........................... 429,449 389,400
---------- ----------
2,043,272 2,092,725
---------- ----------
CAPITAL GOODS -- 6.5%
3,800 Boeing Co............................. 295,591 359,100
13,000 Fluor Corporation .................... 713,319 799,500
9,294 Lockheed Martin Corp.................. 622,012 837,622
---------- ----------
1,630,922 1,996,222
---------- ----------
CONSUMER PRODUCTS -- 2.7%
21,900 Anheuser-Busch Cos.................... 800,286 823,987
---------- ----------
COMPUTER EQUIPMENT -- 1.1%
4,400 Dell Computer Corp.*.................. 228,405 342,100
---------- ----------
COMPUTER SOFTWARE -- 4.0%
13,100 Sterling Commerce Inc.*............... 351,548 386,450
11,100 Sterling Software, Inc.*.............. 661,826 847,763
---------- ----------
1,013,374 1,234,213
---------- ----------
ELECTRICAL EQUIPMENT -- 2.8%
15,000 Berg Electronics Corp.*............... 352,318 408,750
27,500 Scientific-Atlanta, Inc............... 396,768 436,563
---------- ----------
749,086 845,313
---------- ----------
ENERGY -- 7.9%
27,000 Baker Hughes, Inc..................... 838,115 820,125
6,800 Mobil Corporation..................... 764,907 787,100
8,800 Texaco Inc............................ 651,230 809,600
---------- ----------
2,254,252 2,416,825
---------- ----------
FOREST PRODUCTS & PAPER -- 2.7%
24,300 Boise Cascade Corp.................... 881,127 826,200
---------- ----------
HEALTH CARE -- 5.3%
12,700 American Home Products Inc............ 593,087 809,625
35,900 Tenet Healthcare Corp.*............... 696,412 798,775
---------- ----------
1,289,499 1,608,400
---------- ----------
HOTEL/RESTAURANT MANAGEMENT -- 4.0%
22,000 American General Hospitality
Corp................................ 401,162 418,000
14,700 Marriott International Inc............ 585,891 810,337
---------- ----------
987,053 1,228,337
---------- ----------
INDUSTRIAL GOODS -- 2.7%
15,200 PPG Industries, Inc................... 653,602 826,500
---------- ----------
INSURANCE -- 4.9%
7,100 CIGNA Corp............................ 749,225 851,113
13,200 Conseco, Inc.......................... 620,955 650,100
---------- ----------
1,370,180 1,501,213
---------- ----------
MACHINERY -- 3.1%
18,300 Deere & Company....................... 642,707 768,600
7,700 Greenfield Industries, Inc............ 237,884 184,800
---------- ----------
880,591 953,400
---------- ----------
PHARMACEUTICALS -- 2.8%
17,700 Genzyme Corp.*........................ 405,062 451,350
6,400 SmithKline Beecham plc-ADR............ 334,710 389,600
---------- ----------
739,772 840,950
---------- ----------
Principal/
Shares
------
RAW MATERIALS -- 7.9%
13,800 Aluminum Company
of America.......................... 704,813 814,200
9,200 E. I. du Pont de Nemours
and Company......................... 697,451 811,900
19,800 IMC Global Inc........................ 789,510 774,675
----------- -----------
2,191,774 2,400,775
----------- -----------
REAL ESTATE INVESTMENT
TRUSTS (REITS) -- 10.2%
7,000 Chateau Properties Inc................ 175,394 173,250
20,700 Crescent Real Estate Equities,
Inc................................. 775,437 851,287
12,100 Duke Realty Investments Inc........... 356,132 394,763
14,400 Highwoods Properties Inc.............. 374,475 437,400
12,600 Patriot American Hospitality, Inc..... 359,230 423,675
25,000 Security Capital Industrial Trust..... 431,250 456,250
18,300 Security Capital Pacific Trust........ 366,597 386,587
----------- -----------
2,838,515 3,123,212
----------- -----------
TECHNOLOGY -- 5.1%
13,175 Computer Associates
International, Inc.................. 491,463 787,206
6,300 International Business
Machines Corporation................ 614,118 784,350
----------- -----------
1,105,581 1,571,556
----------- -----------
TELECOMMUNICATIONS -- 2.6%
16,500 SBC Communications Inc................ 818,378 794,063
----------- -----------
TRANSPORTATION -- 1.1%
6,800 CSX Corporation....................... 329,880 343,400
----------- -----------
UTILITIES -- 5.3%
21,300 GTE Corporation....................... 821,111 820,050
35,700 Houston Industries
Incorporated........................ 769,777 789,863
----------- -----------
1,590,888 1,609,913
----------- -----------
TOTAL COMMON STOCKS................... 24,839,382 27,747,591
----------- -----------
CORPORATE BONDS -- 2.9%
BROADCASTING -- 1.8%
$575,000 Heritage Media Corporation,
8.75%, 2/15/2006.................... 571,406 552,000
----------- -----------
REAL ESTATE/DEVELOPMENT -- 1.1%
350,000 Post Apartment Homes L.P.
7.25%, 10/01/2003................... 348,749 349,125
----------- -----------
TOTAL CORPORATE BONDS................. 920,155 901,125
----------- -----------
U.S. TREASURY OBLIGATIONS -- 8.3%
200,000 Bills, 12/12/1996..................... 197,964 197,997
440,000 Notes, 6.25%, 6/30/1998............... 442,100 441,311
1,175,000 Notes, 6.625%, 7/31/2001.............. 1,187,135 1,181,568
450,000 Notes, 6.875%, 5/15/2006.............. 449,414 455,152
250,000 Notes, 7.00%, 7/15/2006............... 250,467 250,467
----------- -----------
TOTAL U.S. TREASURY
OBLIGATIONS......................... 2,527,080 2,526,495
----------- -----------
TOTAL INVESTMENTS** --
102.0% $28,286,617 $31,175,211
===========
Assets in excess of
liabilities -- (2.0%)............... (612,258)
-----------
NET ASSETS -- 100.0%.................. $30,562,953
===========
* Non-Income producing.
** The cost of securities for Federal income tax purposes is $28,298,646.
See accompanying notes to financial statements.
8
<PAGE>
Westwood Intermediate Bond Fund
Portfolio of Investments -- September 30, 1996
================================================================================
Principal Cost Value
--------- ---- -----
ASSET BACKED SECURITIES -- 7.6%
$100,000 Ford Credit Auto Loan Master
Trust, 6.50%, 8/15/2002 ............ $ 99,609 $ 99,375
125,000 Green Tree Financial Trust
6.45%, 7/15/2026 ................... 125,000 124,937
84,144 GMAC Grantor Trust, 7.15%,
3/15/2000 .......................... 84,118 84,985
65,493 Old Stone Credit Corp. 5.15%,
9/15/2008 .......................... 65,421 62,382
50,000 Premier Auto Trust 1994-4,
6.45%, 05/02/1998................... 49,316 50,235
----------- -----------
TOTAL ASSET BACKED
SECURITIES.......................... 423,464 421,914
----------- -----------
CORPORATE OBLIGATIONS -- 46.7%
AUTO RELATED -- 1.0%
50,000 Eaton Corp., 8.90%, 8/15/2006 ........ 56,444 55,875
----------- -----------
BROADCASTING -- 1.7%
100,000 Heritage Media Corporation,
8.75%, 2/15/2006.................... 99,375 96,000
----------- -----------
CAPITAL GOODS -- 7.2%
125,000 Boeing Co., 8.75%, 9/15/2031 ......... 147,626 143,187
50,000 Lockheed Martin Corp. 6.625%,
6/15/1998 .......................... 49,994 50,188
200,000 Lockheed Martin Corp. 6.85%,
5/15/2001 .......................... 199,838 199,750
----------- -----------
397,458 393,125
----------- -----------
ENTERTAINMENT -- 4.5%
125,000 Time Warner Inc., 7.95%,
2/01/2000 .......................... 130,644 128,125
125,000 Viacom Inc., 7.75%,
6/01/2005 .......................... 121,561 120,938
----------- -----------
252,205 249,063
----------- -----------
FINANCIAL SERVICES -- 8.6%
125,000 General Motors Acceptance Corp.,
6.625%, 10/01/2002.................. 124,775 122,188
100,000 Olympic Financial Ltd. 13.00%
5/01/2000 .......................... 109,216 112,500
140,000 Salomon Inc., 5.44%,
1/13/1997 .......................... 139,738 139,902
100,000 Societe Generale (NY) 7.40%,
6/01/2006 .......................... 99,792 100,250
----------- -----------
473,521 474,840
----------- -----------
FOREST PRODUCTS & PAPER -- 2.0%
100,000 Boise Cascade Corp.,9.45%,
11/01/2009.......................... 106,778 112,000
----------- -----------
HEALTHCARE -- 2.4%
140,000 Health Care Property Investors
Inc., 6.50%, 2/15/2006.............. 138,946 130,200
----------- -----------
INDUSTRIAL GOODS -- 10.2%
150,000 ITT Corporation 6.25%,
11/15/2000.......................... 149,490 146,063
100,000 JCAC Inc., 10.125%, 6/15/2006 100,000 103,250
100,000 News America Holdings Inc.,
12.00%, 12/15/2001.................. 110,699 107,125
200,000 WMX Technologies Inc. 7.125%,
6/15/2001 .......................... 199,764 201,500
----------- -----------
559,953 557,938
----------- -----------
RAW MATERIALS -- 1.0%
50,000 E.I. du Pont de Nemours and
Company 9.15%,
4/15/2000 .......................... 53,468 53,875
----------- -----------
REAL ESTATE/DEVELOPMENT -- 3.4%
185,000 Post Apartments Homes L.P.,
7.25%, 10/01/2003................... 184,339 184,537
----------- -----------
RETAIL -- 2.0%
100,000 Federated Department Stores Inc.,
10.00%, 2/15/2001................... 107,168 108,375
----------- -----------
TELECOMMUNICATIONS -- 2.7%
150,000 Lucent Technologies, Inc.,
7.25%, 7/15/2006.................... 149,685 150,937
----------- -----------
TOTAL CORPORATE
OBLIGATIONS......................... 2,579,340 2,566,765
----------- -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 2.4%
125,000 Federal National Mortgage
Association, 7.20%,
7/25/2025 .......................... 126,595 125,712
----------- -----------
U.S. TREASURY OBLIGATIONS -- 37.2%
35,000 Bonds, 8.75%, 5/15/2017 .............. 36,730 41,391
55,000 Bonds, 8.125%, 8/15/2019 ............. 54,220 61,490
440,000 Bonds, 7.625% 2/15/2025 .............. 498,547 472,230
625,000 Notes, 6.25%, 6/30/1998 .............. 627,974 626,853
125,000 Notes, 7.75%, 11/30/1999 ............. 126,971 130,001
190,000 Notes, 7.125%, 2/29/2000 ............. 200,936 194,321
125,000 Notes, 7.00%, 7/15/2006 .............. 128,942 128,942
315,000 Notes, 6.625%, 7/31/2001 ............. 317,982 316,761
75,000 Notes, 6.50%, 5/15/2005 .............. 77,322 74,071
----------- -----------
TOTAL U.S. TREASURY
OBLIGATIONS......................... 2,069,624 2,046,060
----------- -----------
TOTAL INVESTMENTS** --
93.9% .............................. $ 5,199,023 $ 5,160,451
===========
Other assets,
less liabilities -- 6.1% ........... 335,242
-----------
NET ASSETS -- 100%.................... $ 5,495,693
===========
** The cost of securities for Federal income tax purposes is substantially the
same.
See accompanying notes to financial statements.
9
<PAGE>
Westwood Balanced Fund
Portfolio of Investments -- September 30, 1996
================================================================================
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 60.3%
AIRLINES -- 0.8%
11,600 Southwest Airlines Co................. $ 332,345 $ 265,350
----------- -----------
AUTO RELATED -- 4.4%
20,800 Chrysler Corporation.................. 576,791 595,400
10,200 Eaton Corp............................ 550,604 615,825
8,900 Lear Corp.*........................... 312,300 293,700
----------- -----------
1,439,695 1,504,925
----------- -----------
CAPITAL GOODS -- 4.4%
3,300 Boeing Co............................. 234,868 311,850
9,700 Fluor Corporation..................... 527,620 596,550
6,827 Lockheed Martin Corp.................. 377,665 615,283
----------- -----------
1,140,153 1,523,683
----------- -----------
CONSUMER PRODUCTS -- 1.8%
16,400 Anheuser-Busch Cos.................... 600,004 617,050
----------- -----------
COMPUTER EQUIPMENT -- 0.8%
3,300 Dell Computer Corp.*.................. 133,418 256,575
----------- -----------
COMPUTER SOFTWARE -- 2.6%
9,400 Sterling Commerce Inc.*............... 253,491 277,300
8,300 Sterling Software, Inc................ 464,509 633,913
----------- -----------
718,000 911,213
----------- -----------
ELECTRICAL EQUIPMENT -- 1.9%
11,300 Berg Electronics Corp.*............... 265,304 307,925
20,800 Scientific-Atlanta, Inc............... 300,198 330,200
----------- -----------
565,502 638,125
----------- -----------
ENERGY -- 5.3%
20,300 Baker Hughes, Inc..................... 634,738 616,612
5,000 Mobil Corporation..................... 560,710 578,750
6,600 Texaco Inc............................ 487,862 607,200
----------- -----------
1,683,310 1,802,562
----------- -----------
FOREST PRODUCTS & PAPER -- 1.8%
18,300 Boise Cascade Corp.................... 660,807 622,200
----------- -----------
HEALTH CARE -- 3.4%
9,400 American Home Products Inc............ 422,180 599,250
25,600 Tenet Healthcare Corp.*............... 483,146 569,600
----------- -----------
905,326 1,168,850
----------- -----------
HOTEL/RESTAURANT MANAGEMENT -- 2.6%
16,500 American General Hospitality
Corp................................ 301,093 313,500
10,600 Marriott International Inc............ 416,506 584,325
----------- -----------
717,599 897,825
----------- -----------
INDUSTRIAL GOODS -- 1.8%
11,400 PPG Industries, Inc................... 499,460 619,875
----------- -----------
INSURANCE -- 3.2%
5,000 CIGNA Corp............................ 525,927 599,375
9,900 Conseco, Inc.......................... 465,672 487,575
----------- -----------
991,599 1,086,950
----------- -----------
MACHINERY -- 2.1%
14,200 Deere & Company....................... 473,771 596,400
5,800 Greenfield Industries, Inc............ 147,036 139,200
----------- -----------
620,807 735,600
----------- -----------
Principal/
Shares
------
PHARMACEUTICALS -- 1.8%
13,200 Genzyme Corp.*........................ 302,838 336,600
5,000 SmithKline Beecham
plc-ADR............................. 260,705 304,375
----------- -----------
563,543 640,975
----------- -----------
RAW MATERIALS -- 5.2%
10,400 Aluminum Company of
America............................. 527,107 613,600
6,800 E.I. du Pont de Nemours and
Company............................. 513,149 600,100
14,900 IMC Global Inc........................ 597,597 582,963
----------- -----------
1,637,853 1,796,663
----------- -----------
REAL ESTATE INVESTMENT TRUSTS -- 7.1%
5,200 Chateau Properties Inc................ 130,227 128,700
15,600 Crescent Real Estate Equities, Inc.... 582,094 641,550
9,100 Duke Realty Investments Inc........... 268,148 296,888
12,800 Highwoods Properties Inc.............. 338,675 388,800
9,500 Patriot American Hospitality, Inc..... 269,010 319,437
20,000 Security Capital Industrial Trust..... 345,000 365,000
13,600 Security Capital Pacific Trust........ 276,759 287,300
----------- -----------
2,209,913 2,427,675
----------- -----------
TECHNOLOGY -- 3.3%
9,475 Computer Associates
International, Inc.................. 381,461 566,131
4,700 International Business Machines
Corporation......................... 458,726 585,150
----------- -----------
840,187 1,151,281
----------- -----------
TELECOMMUNICATIONS -- 1.7%
12,300 SBC Communications Inc................ 606,016 591,937
----------- -----------
TRANSPORTATION -- 0.8%
5,200 CSX Corporation....................... 247,807 262,600
----------- -----------
UTILITIES -- 3.5%
16,000 GTE Corporation....................... 606,963 616,000
26,100 Houston Industries Incorporated....... 562,540 577,463
----------- -----------
1,169,503 1,193,463
----------- -----------
TOTAL COMMON STOCKS................... 18,282,847 20,715,377
----------- -----------
ASSET BACKED SECURITIES -- 3.1%
$169,000 EQCC Home Equity 93-2a,
5.15%, 9/15/2008.................... 164,405 165,709
230,000 Ford Credit Auto Loan Master
Trust, 6.50%, 8/15/2002............. 227,851 228,563
126,216 GMAC Grantor Trust, 7.15%,
3/15/2000 .......................... 126,176 127,478
375,000 Green Tree Financial Trust
6.45%, 7/15/2026.................... 375,000 374,812
21,831 Old Stone Credit Corp., 5.15%,
9/15/2008 .......................... 21,807 20,794
150,000 Premier Auto Trust 1994-4,
6.45%, 05/02/1998................... 148,776 150,704
----------- -----------
TOTAL ASSET BACKED
SECURITIES.......................... 1,064,015 1,068,060
----------- -----------
See accompanying notes to financial statements.
10
<PAGE>
Westwood Balanced Fund
Portfolio of Investments -- September 30, 1996 (Continued)
================================================================================
Principal Cost Value
--------- ---- -----
CORPORATE OBLIGATIONS -- 15.2%
AUTO RELATED -- 0.2%
$ 50,000 Eaton Corp., 8.90%,
8/15/2006 .......................... $ 56,443 $ 55,875
----------- -----------
BROADCASTING -- 0.8%
300,000 Heritage Media Corporation,
8.75%, 2/15/2006.................... 298,125 288,000
----------- -----------
CAPITAL GOODS -- 1.8%
250,000 Boeing Co., 8.75%, 9/15/2031 ......... 295,252 286,375
150,000 Lockheed Martin Corp,.
6.625%, 6/15/1998................... 149,983 150,563
175,000 Lockheed Martin Corp,.
6.85%, 5/15/2001.................... 174,858 174,781
----------- -----------
620,093 611,719
----------- -----------
ENERGY -- 0.3%
100,000 Texaco Capital, 9.00%,
11/15/1997.......................... 102,708 102,930
----------- -----------
ENTERTAINMENT -- 1.3%
225,000 Time Warner Inc.,
7.95%, 2/01/2000.................... 235,159 230,625
260,000 Viacom Inc., 7.75%, 6/1/2005.......... 252,847 251,550
----------- -----------
488,006 482,175
----------- -----------
FINANCIAL SERVICES -- 4.1%
145,000 General Motors Acceptance
Corporation, 6.625%,
10/01/2002.......................... 144,739 141,738
200,000 Olympic Financial Auto Loan,
6.30%, 1/15/2000.................... 199,913 200,750
300,000 Olympic Financial Ltd.,
13.00%, 5/1/2000.................... 327,648 337,500
480,000 Salomon Inc., 5.44%,
1/13/1997 .......................... 479,101 479,664
250,000 Societe Generale (NY)
7.40%, 6/01/2006.................... 249,481 250,625
----------- -----------
1,400,882 1,410,277
----------- -----------
FOREST PRODUCTS & PAPERS -- 0.3%
100,000 Boise Cascade Corp., 9.45%,
11/01/2009.......................... 106,778 112,000
----------- -----------
HEALTH CARE-- 0.6%
210,000 Health Care Property Investors Inc.,
6.50%, 2/15/2006.................... 207,633 195,300
----------- -----------
INDUSTRIAL GOODS-- 2.6%
100,000 E.I. du Pont de Nemours and
Company 9.15%,
4/15/2000........................... 106,935 107,750
370,000 ITT Corporation, 6.25%,
11/15/2000.......................... 362,816 360,287
150,000 JCAC, Inc. 10.125%, 6/15/2006......... 150,000 154,875
275,000 WMX Technologies Inc.
7.125%, 6/15/2001................... 274,676 277,063
----------- -----------
894,427 899,975
----------- -----------
REAL ESTATE / DEVELOPMENT-- 1.5%
500,000 Post Apartment Homes L.P.,
7.25%, 10/01/2003................... 498,213 498,750
----------- -----------
RETAIL -- 0.3%
100,000 Federated Department Stores Inc.,
10.00%, 2/15/2001................... 107,168 108,375
----------- -----------
TELECOMMUNICATIONS -- 0.8%
270,000 Lucent Technologies Inc.,
7.25%, 7/15/2006.................... 269,433 271,688
----------- -----------
TEXTILES -- 0.6%
200,000 V.F. Corporation 6.625%,
3/15/2003 .......................... 186,913 193,500
----------- -----------
TOTAL CORPORATE
OBLIGATIONS......................... 5,236,822 5,230,564
----------- -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 0.4%
130,000 Federal National Mortgage
Association, 7.20%,
7/25/2025 .......................... 131,658 130,741
----------- -----------
U.S. TREASURY OBLIGATIONS-- 21.1%
300,000 Bills, 12/12/1996...... .............. 296,947 296,995
125,000 Bonds, 8.75%, 5/15/2017 .............. 131,179 147,824
105,000 Bonds, 7.125%, 2/15/2023 ............. 107,161 105,733
420,000 Bonds, 7.625%, 2/15/2025 ............. 486,948 450,765
155,000 Bonds, 6.875%, 8/15/2025 ............. 169,929 152,498
200,000 Notes, 4.750%, 2/15/1997 ............. 199,417 199,472
1,900,000 Notes, 6.25%, 6/30/1998 .............. 1,906,845 1,905,662
230,000 Notes, 7.125%, 2/29/2000 ............. 243,148 235,230
1,690,000 Notes, 6.625%, 7/31/2001 ............. 1,714,237 1,699,447
125,000 Notes, 6.25%, 2/15/2003 .............. 127,072 122,918
200,000 Notes, 7.50%, 2/15/2005 .............. 223,510 210,368
275,000 Notes, 6.50%, 8/15/2005 .............. 286,338 271,342
90,000 Notes, 5.875%, 11/15/2005 ............ 88,712 84,985
500,000 Notes, 5.625%, 2/15/2006 ............. 458,103 463,985
695,000 Notes, 6.875%, 5/15/2006 ............. 698,122 702,520
195,000 Notes, 7.00%, 7/15/2006 .............. 201,150 201,150
----------- -----------
TOTAL U.S. TREASURY
OBLIGATIONS......................... 7,338,818 7,250,894
----------- -----------
TOTAL INVESTMENTS** --
100.1% ............................. $32,054,160 $34,395,636
===========
Liabilities in excess of other
assets -- 0.1%...................... (21,857)
-----------
NET ASSETS -- 100.0%.................. $34,373,779
===========
* Non-Income producing.
** The cost of securities for Federal income tax purposes is $32,081,932.
ADR -- American Depository Receipts.
See accompanying notes to financial statements.
11
<PAGE>
THE WESTWOOD FUNDS
Statement of Assets and Liabilities
September 30, 1996
================================================================================
<TABLE>
<CAPTION>
Equity Intermediate Balanced
Fund Bond Fund Fund
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Investments in securities at value (cost $28,286,617,
$5,199,023 and $32,054,160, respectively) ................. $31,175,211 $ 5,160,451 $34,395,636
Cash ........................................................ 41,240 245,195 343,099
Receivable for investments sold ............................. 477,888 714,063 343,978
Dividends and interest receivable ........................... 84,016 80,372 217,418
Receivable for fund shares sold ............................. 57,467 -- 157,602
Prepaid expenses ............................................ 3,867 1,188 1,760
Receivable from Adviser (Note 3) ............................ -- 21,511 --
----------- ----------- -----------
Total Assets ............................................ 31,839,689 6,222,780 35,459,493
----------- ----------- -----------
LIABILITIES
Payable for fund shares redeemed ............................ -- -- 131,058
Payable for securities purchased ............................ 1,168,249 700,000 854,743
Advisory fee payable (Note 3) ............................... 36,548 -- 32,532
Distribution expense payable (Note 3) ....................... 12,068 2,345 13,555
Other accrued expenses ...................................... 59,871 24,742 53,826
----------- ----------- -----------
Total Liabilities ....................................... 1,276,736 727,087 1,085,714
----------- ----------- -----------
NET ASSETS .................................................. $30,562,953 $ 5,495,693 $34,373,779
=========== =========== ===========
Net Assets Consist of:
Capital Stock ............................................... $ 3,980 $ 556 $ 3,543
Additional paid-in capital .................................. 23,699,157 6,129,232 29,784,739
Accumulated undistributed net investment income ............. 199,066 466 472
Accumulated undistributed realized gain (loss) on investments 3,772,156 (595,989) 2,243,549
Unrealized appreciation (depreciation) on investments ....... 2,888,594 (38,572) 2,341,476
----------- ----------- -----------
Net Assets .................................................. $30,562,953 $ 5,495,693 $34,373,779
=========== =========== ===========
SHARES OF BENEFICIAL INTEREST
Retail Class:
Shares of beneficial interest outstanding ................... 3,821,259 556,345 2,385,267
=========== =========== ===========
Net Asset Value, offering and redemption price per share .... $ 7.68 $ 9.88 $ 9.71
=========== =========== ===========
Service Class:
Shares of beneficial interest outstanding ................... 158,838 1,157,663
=========== ===========
Net Asset Value and redemption price per share .............. $ 7.69 $ 9.69
=========== ===========
Maximum offering price per share ($7.69/.96
and $9.69/.96, respectively) .............................. $ 8.01 $ 10.09
=========== ===========
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
THE WESTWOOD FUNDS
Statement of Operations
For the year ended September 30, 1996
================================================================================
<TABLE>
<CAPTION>
Equity Intermediate Balanced
Fund Bond Fund Fund
----------- ------------ -----------
<S> <C> <C> <C>
Investment Income:
Interest .................................................. $ 137,251 $ 338,223 $ 619,105
Dividends ................................................. 432,508 -- 314,462
----------- ----------- -----------
569,759 338,223 933,567
----------- ----------- -----------
Expenses:
Advisory (Note 3) ......................................... 214,970 31,128 178,593
Audit & Tax ............................................... 33,000 10,644 30,000
Shareholder services ...................................... 26,378 12,975 34,966
Legal ..................................................... 20,704 11,834 27,819
Custody ................................................... 14,611 7,160 16,727
Reports to shareholders ................................... 4,360 2,343 12,708
Registration .............................................. 22,345 16,215 17,130
Trustee ................................................... 6,163 4,260 6,485
Distribution-- Retail class (Note 3) ...................... 53,172 13,086 46,711
Distribution-- Service class (Note 3) ..................... 2,102 -- 35,811
Amortization of organizational expenses ................... -- 7,657 8,158
Miscellaneous ............................................. 9,306 10,250 15,097
----------- ----------- -----------
Total expenses before waivers ........................... 407,111 127,552 430,205
Less expenses waived/reimbursed by Adviser .............. (82,555) (70,821) (93,020)
----------- ----------- -----------
Net expenses ............................................ 324,556 56,731 337,185
----------- ----------- -----------
Net investment income ....................................... 245,203 281,492 596,382
----------- ----------- -----------
Net realized gain on investments ............................ 3,776,460 92,155 2,402,768
Change in unrealized appreciation (depreciation)
of investments ............................................ 732,252 (143,346) 761,337
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments....... 4,508,712 (51,191) 3,164,105
----------- ----------- -----------
Net increase in net assets resulting from operations ........ $ 4,753,915 $ 230,301 $ 3,760,487
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
THE WESTWOOD FUNDS
Westwood Equity Fund
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
For the For the
Year ended Year ended
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Operations:
Net investment income ........................................................ $ 245,203 $ 90,652
Net realized gain on investments ............................................. 3,776,460 1,225,125
Change in unrealized appreciation of investments ............................. 732,252 1,610,313
------------ ------------
Net increase in net assets resulting from operations ........................... 4,753,915 2,926,090
------------ ------------
Dividends to shareholders from net investment income:
Retail Class ................................................................. (136,789) (110,241)
Service Class ................................................................ -- (1,473)
------------ ------------
(136,789) (111,714)
------------ ------------
Distributions to shareholders from net realized gain on investments:
Retail Class ................................................................. (1,203,822) (364,338)
Service Class ................................................................ (4,738) (6,782)
------------ ------------
(1,208,560) (371,120)
------------ ------------
Decrease in net assets resulting from distributions to shareholders .......... (1,345,349) (482,834)
------------ ------------
Capital Share Transactions:
Proceeds from sales of shares:
Retail Class ............................................................. 13,671,023 4,912,943
Service Class ............................................................ 1,193,888 56,081
------------ ------------
14,864,911 4,969,024
------------ ------------
Net asset value of shares issued to shareholders upon reinvestment of
dividends and distributions:
Retail Class ............................................................. 1,328,732 464,553
Service Class ............................................................ 4,738 8,255
------------ ------------
1,333,470 472,808
------------ ------------
Net asset value of shares redeemed:
Retail Class ............................................................. (3,924,009) (1,534,515)
Service Class ............................................................ (91,065) (270,255)
------------ ------------
(4,015,074) (1,804,770)
------------ ------------
Net increase in net assets from capital share transactions ................... 12,183,307 3,637,062
------------ ------------
Total increase in net assets ................................................... 15,591,873 6,080,318
Net Assets:
Beginning of period .......................................................... 14,971,080 8,890,762
------------ ------------
End of period (including undistributed net investment
income of $199,066 and $90,652 respectively) ............................... $ 30,562,953 $ 14,971,080
============ ============
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
THE WESTWOOD FUNDS
Westwood Intermediate Bond Fund
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
For the For the
Year ended Year ended
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Operations:
Net investment income ........................................................ $ 281,492 $ 254,052
Net realized gain (loss) on investments ...................................... 92,155 (136,574)
Change in unrealized appreciation (depreciation) of investments .............. (143,346) 347,515
------------ ------------
Net increase in net assets resulting from operations ........................... 230,301 464,993
------------ ------------
Dividends to shareholders from net investment income:
Retail Class ................................................................. (281,492) (253,798)
Service Class ................................................................ -- (254)
------------ ------------
(281,492) (254,052)
------------ ------------
Capital Share Transactions:
Proceeds from sales of shares:
Retail Class ............................................................. 1,825,411 1,686,246
Service Class ............................................................ -- 77
------------ ------------
1,825,411 1,686,323
------------ ------------
Net asset value of shares issued to shareholders upon reinvestment of
dividends and distributions:
Retail Class ............................................................. 184,446 213,072
Service Class ............................................................ -- 254
------------ ------------
184,446 213,326
------------ ------------
Net asset value of shares redeemed:
Retail Class ............................................................. (1,192,260) (4,720,785)
Service Class ............................................................ -- (75,949)
------------ ------------
(1,192,260) (4,796,734)
------------ ------------
Net increase (decrease) in net assets from capital share transactions ........ 817,597 (2,897,085)
------------ ------------
Total increase (decrease) in net assets ........................................ 766,406 (2,686,144)
Net Assets:
Beginning of period .......................................................... 4,729,287 7,415,431
------------ ------------
End of period (Including undistributed net investment
income of $466 and $466, respectively) ..................................... $ 5,495,693 $ 4,729,287
============ ============
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
THE WESTWOOD FUNDS
Westwood Balanced Fund
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
For the For the
Year ended Year ended
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Operations:
Net investment income ........................................................ $ 596,382 $ 302,189
Net realized gain on investments ............................................. 2,402,768 765,282
Change in unrealized appreciation of investments ............................. 761,337 1,452,907
------------ ------------
Net increase in net assets resulting from operations ........................... 3,760,487 2,520,378
------------ ------------
Dividends to shareholders from net investment income:
Retail Class ................................................................. (388,690) (127,208)
Service Class ................................................................ (207,865) (174,988)
------------ ------------
(596,555) (302,196)
------------ ------------
Distributions to shareholders from net realized gain on investments:
Retail Class ................................................................. (136,634) --
Service Class ................................................................ (108,437) --
------------ ------------
(245,071) --
------------ ------------
Decrease in net assets resulting from distributions to shareholders .......... (841,626) (302,196)
------------ ------------
Capital Share Transactions:
Proceeds from sales of shares:
Retail Class ............................................................. 16,778,536 3,974,656
Service Class ............................................................ 4,707,239 382,695
------------ ------------
21,485,775 4,357,351
------------ ------------
Net asset value of shares issued to shareholders upon reinvestment of
dividends and distributions:
Retail Class ............................................................. 501,337 117,015
Service Class ............................................................ 276,240 157,008
------------ ------------
777,577 274,023
------------ ------------
Net asset value of shares redeemed:
Retail Class ............................................................. (2,761,202) (1,156,706)
Service Class ............................................................ (2,171,662) (5,459,031)
------------ ------------
(4,932,864) (6,615,737)
------------ ------------
Net increase (decrease) in net assets from capital share transactions ........ 17,330,488 (1,984,363)
------------ ------------
Total increase in net assets ................................................... 20,249,349 233,819
Net Assets:
Beginning of period .......................................................... 14,124,430 13,890,611
------------ ------------
End of period (including undistributed net investment
income of $473 and $645, respectively) ..................................... $ 34,373,779 $ 14,124,430
============ ============
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
THE WESTWOOD FUNDS
Notes to Financial Statements
================================================================================
Note 1 -- Description. The Westwood Funds (the "Trust") is registered under
the Investment Company Act of 1940, as amended, as an open-end diversified
management investment company and currently consists of four separate investment
portfolios: Westwood Equity Fund, Westwood Intermediate Bond Fund, Westwood
Balanced Fund (collectively, the "Funds") and Westwood Cash Management Fund,
each with two (2) classes of shares known as the Service Class and the Retail
Class (formerly the "Institutional Class"). Westwood Cash Management Fund has
not commenced operations. Each class of shares outstanding bears the same
voting, dividend, liquidation and other rights and conditions, except that the
expenses incurred in the distribution and marketing of such shares are different
for each class with the exception of the Cash Management Fund. Effective
November 8, 1994, all shares in the Service Class of Intermediate Bond Fund were
redeemed. No such shares were outstanding at September 30, 1996, although such
shares are available for sale.
Note 2-- Significant Accounting Policies. The following is a summary of the
significant accounting policies followed by the Funds.
(a) Portfolio Valuation. Investments in securities (including options and
financial futures) are valued at the last sale price on the securities
exchange on which such securities are primarily traded or, if there are no
trades, at the current bid price as of 4:15 p.m. eastern time.
Over-the-counter securities, or securities for which there were no
transactions, are valued at the bid price. Bonds and other fixed income
securities are valued by using market quotations, and may be valued on the
basis of prices provided by a pricing service. Securities for which market
quotations are not readily available are valued at fair value as determined
in good faith by or at the direction of the Board of Trustees. Short-term
securities which mature in 60 days or less are valued at amortized cost, if
their terms to maturity at purchase were 60 days or less, or by amortizing
their value on the 61st day prior to maturity, if their original term to
maturity at purchase exceeded 60 days.
(b) Securities transactions and investment income. Securities transactions
are recorded on a trade date basis. Realized gains and losses from
securities transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income, including,
where applicable, amortization of premium and accretion of discount on
investments, is accrued daily.
(c) Distributions to shareholders. Dividends from net investment income are
declared and paid annually for the Equity Fund and quarterly for the
Balanced Fund. The Intermediate Bond Fund declares dividends of such income
daily and pays those dividends monthly. Distributions of net realized gains
are normally declared and paid at least annually by each Fund. Distributions
are recorded on the ex-dividend date. The amount of dividends and
distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may
differ with generally accepted accounting principles. These "book/tax"
differences are either temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within
the capital accounts based on their tax-basis treatment; temporary
differences do not require a reclassification.
(d) Federal income taxes. It is the policy of each of the Funds to qualify
as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. By so qualifying, the Funds will not be
subject to Federal income taxes to the extent that they distribute all of
their taxable income for the fiscal year.
(e) Organizational expenses. Costs incurred in connection with the
organization and initial registration of the Funds have been deferred and
are being amortized on a straight line basis over sixty months beginning
with each Fund's commencement of operations. In the event any of the initial
shares of any of the Funds, which were purchased by Furman Selz, are
redeemed, the appropriate Fund will be reimbursed for any unamortized
organizational expenses in the same proportion as the number of shares
redeemed bears to the number of initial shares held at the time of
redemption. As of September 30, 1996 all such costs have been amortized.
17
<PAGE>
THE WESTWOOD FUNDS
Notes to Financial Statements (unaudited)(continued)
================================================================================
(f) Determination of net asset value and calculation of expenses. Expenses
directly attributable to a Fund are charged to that Fund. Other expenses are
allocated proportionately among each Fund within the Trust in relation to
the net assets of each Fund or on another reasonable basis. In calculating
net asset value per share of each class, investment income, realized and
unrealized gains and losses and expenses other than class specific expenses,
are allocated daily to each class of shares based upon the proportion of net
assets of each class at the beginning of each day. Distribution expenses are
solely borne by the Class incurring the expense. (g) Use of Estimates.
Estimates and assumptions are required to be made regarding assets,
liabilities, and changes in net assets resulting from operations when
financial statements are prepared. Changes in the economic environment,
financial markets and any other parameters used in determining these
estimates could cause actual results to differ from these amounts.
Note 3 -- Investment Advisory, Administrative and Other Transactions with
Affiliates. As compensation for its services and related expenses, the Trust
pays the Adviser a fee computed daily and payable monthly in an amount equal on
an annualized basis to 1.00% for the Equity Fund, .60% for the Intermediate Bond
Fund and .75% for the Balanced Fund of each Fund's daily average net asset
value. For the fiscal year ended September 30, 1996, the adviser was entitled to
fees of $214,970, $31,128, $178,593 for the Equity, Intermediate Bond and
Balanced Funds, respectively. For the fiscal year ended September 30, 1996, the
adviser waived fees of $82,555, $31,128 and $93,020, respectively. Additionally,
the Adviser has voluntarily agreed to reimburse the Funds in the event the
Funds' annual expenses exceed certain prescribed limits. As of September 30,
1996, the Adviser expects to reimburse the Intermediate Bond Fund in the amount
of $39,693.
Gabelli & Company, an indirect subsidiary of Gabelli Funds, Inc. serves as
distributor of the Funds. On September 30, 1994 the Funds' shareholders approved
a Plan of Distribution (the "Plan") for the Retail Class of shares pursuant to
Rule 12b-1. The Plan authorizes payment by the Funds to reimburse Gabelli &
Company in connection with the distribution of its Retail Class shares at an
annual rate of up to .25% of the average daily net assets. For the year ended
September 30, 1996, the Fund incurred distribution expenses in the amounts of
$53,172, $13,086, $46,711 for the Retail Class of the Equity, Intermediate Bond
and Balanced Funds, respectively. Under the Distribution Plan and Agreement (the
"Plan") for the Service Class, each Fund may reimburse Gabelli & Company on a
monthly basis for cost and expenses in connection with the distribution and
marketing of Service Class shares. This distribution expense is subject to a
maximum limit of 0.35% per annum of the average daily net assets of the Service
Class of the Intermediate Bond Fund and 0.50% per annum of the Service Class of
the Equity and Balanced Funds. The Funds, with respect to the Service Class,
incurred distribution costs and expenses of $2,102 in the Equity Fund and
$35,811 in the Balanced Fund, for the year ended September 30, 1996. There were
no service class shares outstanding during the year ended September 30, 1996 for
the Intermediate Bond Fund. Subject to Board of Trustees approval, distribution
expenses related to the Retail Class shares incurred by Gabelli & Company,
totalling $53,178 for the Equity Fund, $14,391 for the Intermediate Bond Fund
and $438,838 for the Balanced Fund, which are in excess of the Retail Class .25%
limitation may be recovered from the Funds in future periods.
18
<PAGE>
THE WESTWOOD FUNDS
Notes to Financial Statements (continued)
================================================================================
Note 4 -- Securities Transactions.
(a) Purchase and sale transactions. The aggregate amount of purchases and
sales of investment securities, other than short-term securities, for the year
ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
Common Stocks & Bonds U.S. Government Obligations
--------------------- ---------------------------
Purchases Sales Purchases Sales
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Equity Fund ................ $30,343,332 $19,364,044 $ 4,684,605 $ 2,360,375
Intermediate Bond Fund ..... 10,966,399 9,712,138 5,297,438 5,750,904
Balanced Fund .............. 30,059,292 16,911,645 13,126,585 8,733,765
</TABLE>
(b) Federal income tax basis. Gross unrealized appreciation and depreciation
on investment securities at September 30, 1996 based on cost for Federal income
tax purposes, is as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation/Depreciation
------------ ------------ -------------------------
<S> <C> <C> <C>
Equity Fund .................. $ 3,183,595 $ (307,030) $ 2,876,565
Intermediate Bond Fund ....... 34,121 (72,693) (38,572)
Balanced Fund ................ 2,635,406 (321,702) 2,313,704
</TABLE>
Note 5 -- Capital Share Transactions. The Trust is authorized to issue an
unlimited number of shares of beneficial interest with a par value of $0.001
each. Transactions in shares of the Funds are as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1996 Year Ended September 30, 1995
----------------------------- -----------------------------
Equity Intermediate Balanced Equity Intermediate Balanced
Fund Bond Fund Fund Fund Bond Fund Fund
---- --------- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Retail Class
Shares sold ................................... 1,899,542 184,406 1,807,225 858,260 175,874 521,381
Shares issued in reinvestment of net investment
income and capital gain distributions ....... 204,420 18,608 54,134 89,682 22,119 15,004
Shares redeemed ............................... (542,403) (120,336) (292,132) (257,845) (498,753) (152,905)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in shares ............. 1,561,559 82,678 1,569,227 690,097 (300,760) 383,480
========== ========== ========== ========== ========== ==========
Service Class
Shares sold ................................... 160,373 -- 509,146 10,462 8 52,541
Shares issued in reinvestment of net investment
income and capital gain distributions ....... 726 -- 30,203 1,596 27 20,705
Shares redeemed ............................... (12,695) -- (235,513) (47,926) (8,102) (742,089)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in shares ............. 148,404 -- 303,836 (35,868) (8,067) (668,843)
========== ========== ========== ========== ========== ==========
</TABLE>
Note 6 -- Federal Income Tax Carryforwards. At October 1, 1995 the Westwood
Intermediate Bond Fund had a capital loss carryforward of $621,434, of which
$25,394 was utilized by the Fund during this fiscal year. At September 30, 1996
the Westwood Intermediate Bond Fund had a capital loss carryforward of $596,040
which will be available through September 2003 to offset future capital gains as
provided by the Federal Income Tax regulations. To the extent that this
carryforward loss is used to offset future capital gains, the gains so offset
would not be distributed to shareholders.
19
<PAGE>
THE WESTWOOD FUNDS
Selected Per Share Data and Ratios
For a share outstanding throughout each year ending September 30(a)
================================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Retail Service Retail Service Retail Service
Equity Fund Class Class Class Class Class Class* Retail Class
----- ----- ----- ----- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .......... $ 6.59 $ 6.57 $ 5.50 $ 5.48 $ 9.91 $ 5.53 $14.19 $ 14.23
------- ------ ------- ------ ------ ------ ------ -------
Income from Investment Operations:
Net investment income ....................... 0.08 0.06 0.04 0.04 0.10 0.06 0.05 0.27
Net realized and unrealized gain (loss) on
investments ............................... 1.59 1.58 1.31 1.29 0.64 (0.11) 2.12 0.34
------- ------ ------- ------ ------ ------ ------ -------
Total from Investment Operations ............ 1.67 1.64 1.35 1.33 0.74 (0.05) 2.17 0.61
------- ------ ------- ------ ------ ------ ------ -------
Less Distributions:
Dividends from net investment income ........ (0.06) -- (0.06) (0.04) (0.07) -- (0.55) (0.51)
Distributions from net realized capital gains (0.52) (0.52) (0.20) (0.20) (5.08) -- (5.90) (0.14)
------- ------ ------- ------ ------ ------ ------ -------
Total Distributions ......................... (0.58) (0.52) (0.26) (0.24) (5.15) -- (6.45) (0.65)
------- ------ ------- ------ ------ ------ ------ -------
Net Asset Value, End of Period ................ $ 7.68 $ 7.69 $ 6.59 $ 6.57 $ 5.50 $ 5.48 $ 9.91 $ 14.19
======= ====== ======= ====== ====== ====== ====== =======
Total Return (not reflecting sales load) ...... 26.88% 26.33% 25.85% 25.54% 9.14% (0.90)% 20.16% 4.16%
Net Assets End of Period (in thousands) ....... $29,342 $1,221 $14,903 $ 68 $8,637 $ 254 $5,172 $13,161
Ratios to average net assets of:
Net Investment Income ....................... 1.16% 0.92% 0.77% 0.64% 1.63% 1.64%** 0.40% 1.85%
Expenses net of waivers/reimbursements+ ..... 1.50% 1.74% 1.61% 1.85% 0.71% 1.04%** 1.95% 1.40%
Expenses before waivers/reimbursements+ ..... 1.95% 2.19% 2.29% 2.63% 1.94% 2.29%** 2.32% 1.54%
Portfolio Turnover Rate ..................... 106% 106% 107% 107% 137% 137% 102% 75%
Average Commission Rate (per share
of security) ................................. $ 0.054 $0.054 -- -- -- -- -- --
</TABLE>
================================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Retail Retail Service Retail Service
Intermediate Bond Fund Class Class Class(b) Class Class* Retail Class
----- ----- -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .......... $ 9.98 $ 9.48 $ 9.48 $10.73 $10.51 $10.65 $10.00
------ ------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income ....................... 0.51 0.52 0.05 0.48 0.41 0.39 0.51
Net realized and unrealized gain (loss)
on investments ............................ (0.10) 0.50 (0.14) (1.04) (1.03) 0.62 0.65
------ ------ ------ ------ ------ ------ ------
Total from Investment Operations ............ 0.41 1.02 (0.09) (0.56) (0.62) 1.01 1.16
------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income ........ (0.51) (0.52) (0.05) (0.48) (0.41) (0.39) (0.51)
Distributions from net realized capital gains -- -- -- (0.21) -- (0.54) --
------ ------ ------ ------ ------ ------ ------
Total Distributions ......................... (0.51) (0.52) (0.05) (0.69) (0.41) (0.93) (0.51)
------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period ................ $ 9.88 $ 9.98 $ 9.34 $ 9.48 $ 9.48 $10.73 $10.65
====== ====== ====== ====== ====== ====== ======
Total Return (not reflecting sales load) ...... 4.50% 11.13% (0.95)% (5.46)% (6.81)% 10.24% 11.87%
Net Assets End of Period (in thousands) ....... $5,496 $4,729 $ 0 $7,339 $ 76 $2,849 $3,153
Ratios to Average Net Assets of:
Net Investment Income ....................... 5.43% 5.38% 4.85% 4.86% 6.05%** 3.74% 5.25%
Expenses net of waivers/reimbursements+ ..... 1.09% 1.17% 1.45% 0.92% 1.34%** 2.40% 1.94%
Expenses before waivers/reimbursements+ ..... 2.46% 2.47% 4.07% 1.75% 2.37%** 3.46% 3.40%
Portfolio Turnover Rate ..................... 309% 165% 70% 203% 203% 222% 198%
</TABLE>
- ----------
(a) Per share based on the average number of shares outstanding during the
period.
(b) On November 8, 1994, all shares of the Service Class were redeemed and there
have been no further shares issued in this class since that date.
Accordingly, the NAV per share of $9.34 represents the net asset value on
November 8, 1994.
* Prior to January 31, 1994, no shares of the Service Class were issued.
** Annualized.
+ See page 21.
See accompanying notes to financial statements
20
<PAGE>
THE WESTWOOD FUNDS
Selected Per Share Data and Ratios
For a share outstanding throughout each year ending September 30(a)
================================================================================
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Retail Service Retail Service Retail Service
Balanced Fund Class Class Class Class Class Class*
----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............ $ 8.47 $ 8.45 $ 7.12 $ 7.10 $ 10.89 $ 10.88
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income ......................... 0.22 0.20 0.19 0.17 0.12 0.15
Net realized and unrealized gain
on investments .............................. 1.37 1.37 1.35 1.35 0.42 0.36
------- ------- ------- ------- ------- -------
Total from Investment Operations .............. 1.59 1.57 1.54 1.52 0.54 0.51
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income .......... (0.22) (0.20) (0.19) (0.17) (0.13) (0.11)
Distributions from net realized capital gains.. (0.13) (0.13) -- -- (4.18) (4.18)
------- ------- ------- ------- ------- -------
Total Distributions ........................... (0.35) (0.33) (0.19) (0.17) (4.31) (4.29)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .................. $ 9.71 $ 9.69 $ 8.47 $ 8.45 $ 7.12 $ 7.10
======= ======= ======= ======= ======= =======
Total Return (not reflecting sales load) ........ 19.11% 18.85% 21.98% 21.67% 5.30% 4.67%
Net Assets End of Period (in thousands) ......... $23,158 $11,216 $ 6,912 $ 7,212 $ 3,081 $10,810
Ratios to average net assets of:
Net Investment Income ......................... 2.62% 2.34% 2.47% 2.26% 1.55% 2.15%
Expenses net of waivers/reimbursements+ ....... 1.32% 1.57% 1.35% 1.62% 1.68% 1.17%
Expenses before waivers/reimbursements+ ....... 1.71% 1.96% 1.86% 2.24% 2.36% 2.11%
Portfolio Turnover Rate ....................... 111% 111% 133% 133% 168% 168%
Average Commission Rate (per share of security).. $ 0.055 $ 0.055 -- -- -- --
</TABLE>
1993 1992
---- ----
Retail Service Retail
Balanced Fund Class Class* Class
----- ------ ------
Net Asset Value, Beginning of Period ............ $ 10.45 $ 10.24 $ 10.00
------- ------- -------
Income from Investment Operations:
Net investment income ......................... 0.20 0.19 0.31
Net realized and unrealized gain
on investments .............................. 1.44 0.52 0.49
------- ------- -------
Total from Investment Operations .............. 1.64 0.71 0.80
------- ------- -------
Less Distributions:
Dividends from net investment income .......... (0.24) (0.07) (0.31)
Distributions from net realized capital gains.. (0.96) -- (0.04)
------- ------- -------
Total Distributions ........................... (1.20) (0.07) (0.35)
------- ------- -------
Net Asset Value, End of Period .................. $ 10.89 $ 10.88 $ 10.45
======= ======= =======
Total Return (not reflecting sales load) ........ 17.60% 6.96% 7.32%
Net Assets End of Period (in thousands) ......... $ 1,583 $ 114 $ 3,716
Ratios to average net assets of:
Net Investment Income ......................... 1.90% 1.76%** 3.13%
Expenses net of waivers/reimbursements+ ....... 1.82% 2.07% 1.44%
Expenses before waivers/reimbursements+ ....... 2.97% 3.14%** 2.38%
Portfolio Turnover Rate ....................... 192% 192% 178%
Average Commission Rate (per share of security).. -- -- --
- ----------
(a) Per share based on the average number of shares outstanding during the
period.
* Prior to April 6, 1993, no shares of the Service Class were issued.
** Annualized.
+ Beginning in fiscal 1995, the ratios exclude a reduction of expenses for
custodian fee credits on cash balances maintained with the custodian.
Including such custodian fee credits, the expense ratios for fiscal 1996
would be 1.44% and 1.68% for Equity Retail and Service Class, respectively,
net of waivers and 1.88% and 2.13% for Equity Retail and Service Class
before waivers. For Intermediate Bond Fund: 1.00% and 2.36%. For the
Balanced Fund: expenses net of waivers would be 1.24% and 1.49% for the
Retail and Service Class, respectively, and 1.63% and 1.89% before waivers
for the Retail and Service Class, respectively.
See accompanying notes to financial statements
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
The Westwood Funds
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the selected per share data and ratios present fairly,
in all material respects, the financial position of Westwood Equity Fund,
Westwood Intermediate Bond Fund and Westwood Balanced Fund (constituting The
Westwood Funds, hereafter referred to as the "Fund") at September 30, 1996, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended and the
selected per share data and ratios for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and selected per share data and ratios (hereafter referred to as
"financial statements") are the responsibility of the Fund's managment; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1996 by correspon dence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
November 12, 1996
22
<PAGE>
THE WESTWOOD FUNDS
1996 Federal Tax Status of Dividends (unaudited)
This information is presented to you to meet regulatory requirements and
no current action on your part is needed.
Westwood Equity Fund
34.0% of the income dividend distributed on December 28, 1995 qualifies for the
Corporate Dividends Received Deduction. 9.7% of the distributions were derived
from United States Treasury Obligations. The $0.2845 distribution of long-term
capital gains paid on December 28, 1995 was designated by the Trustees as a
capital gain distribution.
Retail Class
Of the $0.58 in distributions paid to you in cash or reinvested in your
account during the Fund's fiscal year ended September 30, 1996, $0.06 was
derived from net investment income, $0.23 from short-term capital gains and
$0.29 from long-term capital gains.
Service Class
Of the $0.52 in distributions paid to you in cash or reinvested in your
account during the Fund's fiscal year ended September 30, 1996, $0 was derived
from net investment income, $0.23 from short-term capital gains and $0.29 from
long-term capital gains.
Westwood Intermediate Bond Fund
46.1% was derived from United States Treasury Obligations. Many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government securities.
The Westwood Intermediate Bond Fund did not meet this requirement for fiscal
1996.
Retail Class
Of the $0.51 per share dividend paid to you in cash or reinvested in your
account for the fiscal year ended September 30, 1996, the entire $0.51 was
derived from net investment income.
Westwood Balanced Fund
18.3% of the income distributed qualifies for the Corporate Dividends Received
Deduction. 36.3% of the distributions were derived from United States Treasury
Obligations.
Retail Class
Of the $0.35 in distributions paid to you in cash or reinvested in your
account during the Fund's fiscal year ended September 30, 1996, $0.22 was
derived from net investment income, $0 from short-term capital gains and $0.13
from long-term capital gains.
Service Class
Of the $0.33 in distributions paid to you in cash or reinvested in your
account during the Fund's fiscal year ended September 30, 1996, $0.20 was
derived from net investment income, $0 from short-term capital gains and $0.13
from long-term capital gains. The $0.13 distribution of long-term capital gains
paid on December 28, 1995 was designated by the Trustees as a capital gain
distribution.
23
<PAGE>
The Westwood Funds
One Corporate Center
Rye, NY 10580
General and Account Information:
1-(800) GABELLI (422-3554) (all continental states)
Board of Trustees
SUSAN M. BYRNE JAMES P. CONN
President and Managing Director and
Chief Investment Officer Chief Investment Officer
Financial Security Assurance
ANTHONY J. COLAVITA DR. WERNER J. ROEDER
Attorney-at-Law Director of Surgery
Anthony J. Colavita, P.C. Lawrence Hospital
Officers
SUSAN M. BYRNE GORDON M. FORRESTER
President and Assistant Treasurer
Chief Investment Officer
BRUCE N. ALPERT JOAN V. FIORE
Vice President Assistant Secretary
JOHN J. PILEGGI SHERYL HIRSCHFELD
Treasurer Assistant Secretary
JAMES E. McKEE
Secretary
Investment Adviser
------------------
Teton Advisers LLC
Investment Sub-Adviser
----------------------
Westwood Management Corporation
Distributor
-----------
Gabelli & Company, Inc.
Custodian
---------
The Bank of New York
Legal Counsel
-------------
Baker & McKenzie
Independent Accountants
-----------------------
Price Waterhouse LLP
- --------------------------------------------------------------------------------
This report is for the information of the shareholders of The Westwood Funds.
Its use in connection with any offering of the Trust's shares is authorized only
in case of a concurrent or prior delivery of the Trust's current prospectus.
- --------------------------------------------------------------------------------
